Full title: Discussion: should government make cuts to welfare spending during recession?

Hello everyone,

Recently I was studying with a group of friends about Canadian social welfare and someone suggested a question: "should government make cuts to social welfare spending during economic downturns?" We thought it would be an interesting question to discuss upon so we divided up into three groups according to the Canadian political parties (the Liberals, the NDP, and the Conservatives) and will be presenting out ideas based on what political party we are in (to answer this question from the point of view of that political party).

I am in the Liberal party but I am not that familiar with it. So based on what I have learned, I analyzed the question and put down what I think the Liberals would do if they were in the situation. For people out there who belong to the Canadian Liberal party, can you please let me know what you think about my argument? For people who belong to the NDP and the Conservative party, please feel free to share your point of view as well

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Should government make cuts to social welfare spending during economic downturns? Ė From the point of view of Liberalism along with Keynesianís economic ideas.

[The Liberal party prefers action over ideology - the idea of pragmatism, one of the characteristics of the Liberal ideology. On a continuum of the political parties in Canada, the Liberals avoid to end up being in either extreme of the continuum (i.e. the NDP and the Conservatives) so that they are free from the unnecessary restrains that might prevent them achieving their goal.]

While the Liberals endorse the idea of a free market system, they also believe that the market should be regulated by the government to a degree and to provide a minimum of income security benefits. From the point of view of Liberalism, government intervention is necessary if we want to let the society remain stable and to have it grow constantly overtime.

According to the concepts of individualism and liberty of the Liberal ideology, if we were to let the free market system runs freely without government intervention, our nation would become prosperous as each individual would go and pursue his own interest and maximize his utility. The disadvantage of having a free market system is, however, that some people are going to become extremely rich and some are going to become extremely poor depending on various personal and situational factors. The result is that the societyís wealth is most likely going to be concentrated only on the hands of a few individuals, and a great proportion of the population would suffer from various degrees of poverty and unemployment. This contradicts the Liberalsí goal of maintaining a stable society, and the gap exists between the rich and the poor would become irremediable. Therefore, it is important for the government to intervene the free market through controlling government spending, which includes controlling its social welfare spending.

Now the question is, should the government make cuts to social welfare spending , as a way to decrease government deficit, during economic downturns? I wish to analyze this question through John Maynard Keynesís economic theory. This should be appropriate as Keynesianís economic theory was initially inspired by the Liberal ideology; if we wish to have stable economy and society, then the free market system does need a degree of government intervention to avoid problems such as high levels of unemployment and poverty.

To begin, letís first define the concepts of aggregate demand and aggregate supply. Aggregate demand represents the total amount of goods and services wanted by the individuals and the public (the government) within a nation. Aggregate supply represents the total amount of goods and services that is supplied by the economy. In an economy, the point where the aggregate demand is equal to the aggregate supply, meaning that the amount of goods demanded by a nation is equal to the amount of goods supplied by a nation, is at equilibrium and the resulting society is said to be stable and will grow constantly overtime.

When the economy is in a recession, where the aggregate supply is greater than the aggregate demand since people do not have the sufficient income to purchase the goods produced by the economy, it has been deviated from a stable society to one where there is a high level of unemployment. At this time, those are unemployed, having no sources of income, would have to withdraw their savings from their bank to consume. As Keynes argue that when there is no savings, there would be no investment and no growth in our capital, so there would be no economic growth for the nation. This is undesirable and it contradicts the Liberalsí goal of wanting the society to grow overtime. Therefore, it is important for the economy to eliminate the excess unemployment and to go back to its equilibrium level.

One obvious way to do this is to increase the aggregate demand so that it equates the aggregate supply. Now there are two major ways to do this: either by increasing spending from the individuals in the society, or by increasing spending from the government (i.e. the public). The former option is characterized by making cuts to social welfare spending through lowering tax rates, and the latter is characterized by an increase in government spending through increasing tax rates, meaning an increase in social welfare spending. Letís analyze each of them separately.

If the government makes cuts to social welfare spending through a decrease in tax rates during a recession, it means each individual in the economy gets to keep more of their income to spend or to save. If we want to get out of the recession, it is important for us to simulate the economy through individuals increase their spending and thereby increase the aggregate demand. During an economic recession however, people are more likely to save that extra proportion of income to their bank account rather than spending it. This is true because on a psychological level, individuals tend to have pessimistic views of the future when the economy is in a recession and they would want to save more money in case of emergencies. The economy is more likely to remain in recession than to go back to its equilibrium state. The problems of recession such as high levels of unemployment and poverty continue to persist.

If the government makes no cuts to social welfare spending, or even increases in social welfare spending through a increase in tax rates during a recession, it means that although each individual would keep a smaller proportion of his income, the economy is going to be stimulated by an increase in the aggregate demand through an increase in governmentís spending on social welfare and all other forms of government spending. When the economy is back to its equilibrium state, where the aggregate demand is equal to the aggregate supply, the problems of recession such as high levels of unemployment and poverty get to be eliminated, and the society as a whole would become stable and would grow overtime.

Through the above examination, government should not make cuts to social welfare spending economic downturns.
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Concerns:

*Would the argument be too economically based instead of politically based?
**Is there anything that the Liberal party has done in the past that is consistent with the above presented idea?

English is not my first language so in case if there is a grammatical mistake or two, please bear it with me lol.

I not sure about cutting what people get but more about who gets what. If you are unable to work because of serious physical or mental health problems than no I would not cut their benefits. However if you are able and willing to work but are just sitting at home collecting welfare or EI then no you shouldn't receive anything. Also liberalism is not an ideology in canada, Liberalism stands for nothing it stands for doing whatever you can to abtain or keep power. I can respect the ndp because atleast most of the time they stand up for their beleifs even if they are wrong. With liberals you guys stand for nothing you would stand for cream cheese and acrobats if they were popular but liberalism is not an ideology.

I think a recession would be the worst time to cut it. I have lived through boom and bust economies. I was once in a situation where work was so scarce that employers would call you seeing if you wanted to work for them - yet there were still people on welfare.

On the other hand, during this recession, I know a hard working guy who came from the old country and worked hard all his life, and is not about 55 and is unable to find a job. He did honest manual labour all his life but is now unemployable.

I would certainly like to cut the benefits of the first group but not the second. Guess thats the bitch though. Its hard to separate the handful of people who really need welfare from the majority of people who don't.

I with with Thurmas. Welfare benefits in Ontario are pretty low, we need to be looking at who is getting them and for how long etc. etc. We need to cut off the multiple wives thing, and look at re-training the able bodied to do a job. We need more skills training and apprenticeships, which we would have to pay for, but should benefit us in the long run.

We need to bring back 'shop' in high schools were we train a mechanic and the last two years of high school count towards an apprenticeship.

I would disagree that in today's recession that people are saving rather than spending. People don't save anymore. Rather I think what some are doing is paying down debt, which frees up more income.

Also keep in mind that the Liberals don't believe that there is anything wrong with central planning; all the problems of central planning to them is attributed to inefficient administration/policy. Therefore, a Liberal government would never cut the benefits though they may tighten up how it is dispersed and who gets it.

Here would be three things I'd like to see when it comes to welfare benefits:

1) introduce a benefit bank card as some US states do. Instead of getting a cheque each month that they can spend on anything, the are given a government regulated bank account (provided by any private bank) and they pay for things through the interac system.

The cards will not work at places like the beer store or "adult" stores.

They are limited to $40 in cash withdraws per month and the government tracks what they spend their money on. The info collected by this card is used by financial councilors who advise them on how to better spend their money.

2) a welfare fraud tipline with a $500 reward for whoever gives a successful tip

3) a 5 year limit on welfare benefits with a 2 year "cooling period" before you are allowed to apply again.

This would not apply to single parents or those in school.

Benefits would be reduced in the 3rd, 4th and 5th year by 10% per year.

3) a 5 year limit on welfare benefits with a 2 year "cooling period" before you are allowed to apply again.

This would not apply to single parents or those in school.

I think that would result in disaster. A certain percentage of people on welfare are there because they are unemployable. What is a unemployable guy with no support going to do once his welfare is cut off ? Crime. What does it cost to put someone on welfare ? About 6 grand a year. Prison ? 60 grand a year.

Personally, what I would do would be to raise welfare rates - but bring with the new rates comes full time work. 40 hours a week, no bullshit. You don't want to work, give them $100 a month and food and shelter in some sort of cross between a homeless shelter and a public housing project. With a police officer and social worker in the building.

There is all sorts of work that needs to be done, from answering the phones at 311, to picking up garbage. There are loads of things that could be recycled if people did not have to pay workers 12 dollars an hour (toss in vacation pay CPP and EI). Lots of houses being torn down could be recycled instead of being trucked off to the dump.

Furthermore, if people do their jobs well, there should be merit pay. A number of training programs should be made available to people who have completed a year or so and did a good job.

I guess the bottom line is it should be converted from the current communist system where everybody gets the same no matter what to one which follows a reward model like real life.

I think that would result in disaster. A certain percentage of people on welfare are there because they are unemployable. What is a unemployable guy with no support going to do once his welfare is cut off ? Crime. What does it cost to put someone on welfare ? About 6 grand a year. Prison ? 60 grand a year.

I don't believe that's true for the majority of people.

If this were true then we would have seen a reduction in crime since the welfare state was introduced, however the opposite has happened. Crime has exploded since the 1960s.

Furthermore, this would mean that we'd see a low incident of crime among those receiving welfare, which isn't the case.

Personally I'm okay with spending more to put criminals in jail than putting them on welfare. IMO, the type of person who would turn to crime instead of a job shouldn't be on the streets in the first place.

I consider it a good use of funds, especially because the guy in prison isn't going to have a dozen kids who will all go on to live their lives on welfare also.

It is kind of ironic that a minor setback for capitalism last year could mean the end of socialism. Capitalism is the goose that lays socialism's golden egg and when it took a hit last year it exposed socialism as an unsustainable pipe dream. Just look at all the euro-socialist countries that are on the verge of bankruptcy due to ridiculous social policies. Unions and socialists have destroyed Greece, Portugal, Spain, and Italy (not to mention the USA a few years down the road).

Forget about economic cycles, I think the current global economic situation is a real opportunity to finally turn the tide against the welfare state and expose it for what it really is - unsustainable greed by lazy, unaccountable people.

All I know is the Welfare rate for a single person in Ontario is a maximum of $588 a month. The very least you can get a room for is $100 a week. So at the maximum you have $188 a month for food, transportation and a telephone so employers can call you with a job. Single and on welfare in Ontario is poverty.

I have known good hard working people who lost their jobs last year and in spite of flooding the job market with applications and taking upgrading courses they ended up on welfare. How low would you like to see the payments go. Perhaps the poverty they now live in could be reduced further. They are depressed enough without having to bear the smug judgment of those that have never been there.

Sure there are the slackers and leaches but there are a lot of people that have fallen on hard times and in a compassionate society they should be looked after in a way that affords them some dignity.

I think that would result in disaster. A certain percentage of people on welfare are there because they are unemployable. What is a unemployable guy with no support going to do once his welfare is cut off ? Crime. What does it cost to put someone on welfare ? About 6 grand a year. Prison ? 60 grand a year.

I don't believe that's true for the majority of people.

Neither do I, but there is a significant minority of these people that are simply unemployable. If you cut off their benefits, where will they go ?

Personally, what I would do would be to raise welfare rates - but bring with the new rates comes full time work. 40 hours a week, no bullshit. You don't want to work, give them $100 a month and food and shelter in some sort of cross between a homeless shelter and a public housing project. With a police officer and social worker in the building.

There is all sorts of work that needs to be done, from answering the phones at 311, to picking up garbage. There are loads of things that could be recycled if people did not have to pay workers 12 dollars an hour (toss in vacation pay CPP and EI). Lots of houses being torn down could be recycled instead of being trucked off to the dump.

Furthermore, if people do their jobs well, there should be merit pay. A number of training programs should be made available to people who have completed a year or so and did a good job.

I guess the bottom line is it should be converted from the current communist system where everybody gets the same no matter what to one which follows a reward model like real life.

All I know is the Welfare rate for a single person in Ontario is a maximum of $588 a month. The very least you can get a room for is $100 a week. So at the maximum you have $188 a month for food, transportation and a telephone so employers can call you with a job. Single and on welfare in Ontario is poverty.

There's work in Ontario if you really want it. Minimum wage is now $10.25 an hour; McDonalds is always hiring.

Secondly, if you're living in an area where it costs $100 a week for one room you might want to consider moving to an area with lower living expenses.

Welfare shouldn't be meant to prevent poverty; it should be there to prevent starvation and homelessness.

$588 is what a single person will receive but those with children will receive more. There are also other sources of income for welfare recipients. My cousin on welfare has one child and receives approx $1000 a month while she lives in subsidized housing for $150 a month.

teabag wrote:

I have known good hard working people who lost their jobs last year and in spite of flooding the job market with applications and taking upgrading courses they ended up on welfare. How low would you like to see the payments go. Perhaps the poverty they now live in could be reduced further. They are depressed enough without having to bear the smug judgment of those that have never been there.

How do you know I've never been there? I've personally experience levels of poverty that are virtually unheard of in Ontario. You deal with it and do what it takes. Like I said, there are TONS of minimum wage jobs out there and with minimum wage now being over $10 an hour, there's a lot of jobs out there that bring in a decent income.

Quote:

Sure there are the slackers and leaches but there are a lot of people that have fallen on hard times and in a compassionate society they should be looked after in a way that affords them some dignity.

IMO, you earn dignity.

There's not just 'some" leachers out there. A high percentage of them are. I grew up in government housing surrounded by people on welfare people and 20 year-olds on "disability". They know how to work the system.

$580 may not seem like much but many of them also work under the table.

The pro-welfare advocates like to claim that the average welfare claimant only stays on welfare for 2 years. Therefore, they shouldn't be opposed to cutting off those who have been on welfare for 5 years. If you can't find a job after 5 years then there is something seriously wrong.

Neither do I, but there is a significant minority of these people that are simply unemployable. If you cut off their benefits, where will they go ?

Depends how you define "unemployable". Walk into any fast food joint and there will be retards sweeping up the floors. If they are employable than anyone who WANTS to work can find work. Too many people in our society call themselves unemployable because they are lazy. Having a disability doesn't make you unemployable. It just gives you an excuse to pretend that you are.

Neither do I, but there is a significant minority of these people that are simply unemployable. If you cut off their benefits, where will they go ?

Depends how you define "unemployable". Walk into any fast food joint and there will be retards sweeping up the floors. If they are employable than anyone who WANTS to work can find work. Too many people in our society call themselves unemployable because they are lazy. Having a disability doesn't make you unemployable. It just gives you an excuse to pretend that you are.

You are talking about exceptions the - "retards" are window dressing. Its true that there are people with a couple strikes against them that cling to that excuse as a crutch - but there are others that with four or five strikes against them. There is a gentleman I know who is proud Italian who has done hard manual labour all his life. His English is crap, his body is ruined and he has no education. Now he can't find a job, and I don't believe someone turns 55 and decides..."hey I want to be a lazy welfare bum". He worked hard all his life, and I don't think he deserves to be treated like shit.

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